Inheritance
taxes are separate from estate taxes imposed by the federal government
and many states.

The Internal Revenue Service collects the estate tax
on all U.S. citizens and residents. The tax is levied on the deceased's
estate as a whole, filed on a single estate tax return and paid
out of the estate's funds. The U.S. government imposes no
inheritance tax.

States, however, may impose an inheritance tax on
beneficiaries who receive property from the deceased. These taxes
are assessed by states in place of or in addition to state and federal
estate taxes. The tax is calculated separately for each beneficiary,
and each beneficiary is responsible for paying his or her own inheritance
taxes.

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To see if your state levies an inheritance tax, check
Bankrate's
state tax pages. Where such a tax is collected, spouses and
children of the deceased often are taxed at lower rates than other
heirs.

You can specify in your will that you want your estate
to pay any inheritance taxes that the government may slap on your
heirs. It's a nice gesture, and may even keep your heirs from being
forced to sell property you leave them in order to pay taxes.

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